Soltesiz v. Tracy

Alice Robie Resnick, J. The issue presented by this case is whether former R.C. 5747.07(F), now R.C. 5747.07(G),1 imposes personal liability for penalties and interest owed by the corporation upon the employee responsible for filing the report and paying the employee withholding tax. R.C. 5747.06 requires that all employers withhold from their employees’ compensation an amount substantially equivalent to the income tax reasonably estimated to be due from the employees. Employers are required to file a return and pay the tax withheld according to the schedule set forth in R.C. 5747.07(B). R.C. 5747.07(G) imposes personal liability upon the employee responsible for filing the tax report and making the tax payments: “An employee of a corporation, limited liability company, or business trust having control or supervision of or charged with the responsibility of filing the report and making payment, or an officer, member, manager, or trustee of a corporation, limited liability company, or business trust who is responsible for the execution of the corporation’s, limited liability company’s, or business trust’s fiscal responsibilities, shall be personally liable for failure to file the report or pay the tax due as required by this section. The dissolution, termination, or bankruptcy of a corporation, limited liability company, or business trust does not discharge a responsible officer’s, member’s, manager’s, employee’s, or trustee’s liability for a failure of the corporation, limited liability company, or business trust to file returns or pay tax due.” Appellant does not contest that he, as chief executive officer of P.T.M., Inc., is the employee responsible for the filing of the tax returns and making the payments. He does not dispute that pursuant to R.C. 5747.07(G), he is derivatively liable for the tax itself. He does however contend that the statute does not impose upon him derivative liability for the penalties and interest assessed against the corporation. Both the Tax Commissioner and the Ohio Board of Tax Appeals found that appellant is derivatively liable for the penalties and interest as well as the tax. Appellant asserts that because R.C. 5747.07(G) imposes personal liability solely for the “failure to file the report or pay the tax due,” the liability necessarily excludes the penalties and the interest. Appellant points out that when the General Assembly refers to the imposition of penalties and interest, it specifically denotes them as such. See, e.g., R.C. 5747.06(D), former 5747.07(E)(5) (now [479] 5747.07[F][5]), 5747.08(G), 5747.12, and 5747.15. He argues, therefore, that the lack of such specific denotation in R.C. 5747.07(G) implies that the General Assembly did not wish to impose these fees upon the responsible employee. On the contrary, appellee asserts, as the board and the commissioner determined, that because R.C. 5747.07(G) states that the responsible employee “shall be personally liable for failure to file the report or pay the tax due,” the statute imposes personal liability for the penalties and interest assessed as well as the tax. (Emphasis added.) The board and the commissioner determined that the consequence of failing to file the report and pay the tax is the imposition of penalties and interest, and thus liability for “failure” necessarily includes those added assessments. When a statute is clear and unambiguous in its terms, we must apply the statute, not interpret it. Storer Communications, Inc. v. Limbach (1988), 37 Ohio St.3d 193, 194, 525 N.E.2d 466, 467. R.C. 5747.07(G) imposes personal liability upon the responsible employee for either (1) the employer-corporation’s failure to file the employee withholding tax report, or (2) the employer-corporation’s failure to pay the tax due. An employer-corporation that fails to file a tax report is liable for a monetary penalty. R.C. 5747.15(A)(1). An employer-corporation that fails to pay the tax due under R.C. Chapter 5747 or fails to remit the tax withheld from its employees is liable for interest, R.C. 5747.07(F)(5), and a monetary penalty, R.C. 5747.15(A)(3) and (4). The employer failing to remit taxes is also criminally liable. R.C. 5747.99(A). Accordingly, when an employer-corporation fails to either (1) file a tax return or (2) remit the withheld taxes owed, it is liable for the taxes, the penalty, and the interest accrued. Former R.C. 5747.07(F), now R.C. 5747.07(G), is clear and unambiguous and imposes personal liability upon the responsible employee for the consequences of failing to file the employer’s tax report or failing to remit the employee withholding tax. Accordingly, the responsible employee is personally liable for the taxes, the penalty, and the interest accrued. The decision of the Board of Tax Appeals is affirmed. Decision affirmed. Moyer, C.J., Douglas and Cook, JJ., concur. Petree, F.E. Sweeney and Pfeifer, JJ., dissent. Charles R. Petree, J., of the Tenth Appellate District, sitting for Wright, J. Footnotes [1] At the time that appellee issued the assessment against appellant, the statute imposing personal liability upon the responsible employee was set forth in R.C. 5747.07(F). The General Assembly revised R.C. 5747.07, effective July 22, 1994. R.C. 5747.07(G), with minor additions, now contains the identical provision governing personal assessments against responsible employees. For purposes of this decision and opinion, we will refer to the provision as R.C. 5747.07(G), the current section.